The COVID-19 crisis has caused a lot of financial hardship for many people in Mississauga - and while there is government assistance available, it is simply not enough for many people. Oftentimes, if you are struggling financially one of the best things you can do is to get out of debt and at Akal Mortgages, we can help you do that through a technique called debt consolidation.
What is debt consolidation?
Debt consolidation is when you take your high interest debts and pay them off with another loan that has a lower interest rate. This in itself doesn’t immediately change the amount of debt you have, but it does put it all into one monthly payment which makes it more convenient. More importantly, the interest rate is lower meaning that you can either lower your monthly payments (giving you more cash flow each month) or pay of your debt faster. In some cases, you will even be able to do both!
What options does Akal Mortgages offer for debt consolidation in Mississauga?
There are various options to consolidate your debt, but these are the three options that we focus on:
- Mortgage refinancing – this is when you break your current mortgage and get a new one at a lower interest rate. Your current debts can be rolled into your new mortgage as long as you have sufficient equity in your home. Keep in mind, that there will be a financial penalty for breaking your first mortgage, so this option works best when you are already close to your mortgage renewal.
- Second mortgage – this is when you get an additional mortgage against the equity in your home which is then used to pay off your existing debts. Most lenders will allow you to get a second mortgage of up to 80% of your home equity. The interest rate on a second mortgage is usually a little higher than the interest rate on a first mortgage, so this option usually works best if your mortgage renewal date is still some time away.
- Home equity line of credit (HELOC) – A HELOC is a revolving line of credit against the equity in your home. This option works best if you are going to need to borrow money in the future – but for this to work to help you pay off your debt, you also need the self-control not to over extend yourself.
Call Akal Mortgages today!
If you would like to learn more about these options for debt consolidation in Mississauga, contact Akal Mortgages today.
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